Steve Inch, Executive Director of Development & Regeneration Services (DRS) for Glasgow City Council looks to the future of commercial property in the city.
The biggest challenge without doubt is bringing
confidence back into the property market. Glasgow was fortunate
enough to have a substantial amount of retail and commercial
development in the pipeline when the recession took hold and this
has kept a momentum in the market not apparent elsewhere. Securing
tenants for the space which has been constructed is vital if the
next round of development projects is going to be brought
forward.
I expect that demand for commercial and retail
space will recover, driven by demand from companies in the City who
we know are waiting to expand, and inward investors who we have
been tracking for some time, but who have put their projects on
temporary hold until the economy is in full recovery. The Council
will be playing its full part by continuing to develop innovative
ways of marketing its own land for development and using new
financial instruments such as Tax Increment Financing to de-risk
the development process.
Why should an individual investor or institution
invest in commercial office property in Glasgow, rather than one of
your competitor cities?
Although rental levels, and therefore property
yields, have taken a bit of a battering over the last couple of
years, there has been a surprisingly high level of activity in the
commercial market with the arrival of Tesco, expansions in both
esure and Fortis and many of the leading legal companies taking new
space. The most recent annual employment figures show that Glasgow
has yet again been
the fastest growing employment base of any City in
the UK and with the stream of new business projects in the
pipeline, I expect demand for commercial space to rise sharply over
the next two to three years. As existing space is taken up, it
creates new opportunities for developers who are prepared to bring
new projects forward.
Can you sum up for us the appraoch Glasgow Ciy
Planners take in their relationship with commercial property
developers?
Our Planning and Building Control functions have
been completely revised to ensure they are delivered in a way
which understands the mechanics of the development process.
Typically, our dialogue with a developer will start from the
timescale for completion and opening and work back to when a
planning consent needs to be in place. Working with the developer's
team we then programme what we require by pre application
discussions, when we need the planning
application to be submitted, and agree a date on
which we propose to take an application to our Planning Committee.
I like to think that if an application has an exceptionally
critical timescale, we can be flexible enough to meet it and we
have several examples where we have done just that.
Looking ahead, what forthcoming commercial
developments in Glasgow excite you the most
and why?
The biggest challenges at the moment are delivering
the new Buchanan Galleries phase since it is our pilot Tax
Increment Finance project and will provide a pilot for the wider
extension of this to other developments in the City. However
the prospect of a Phase 2 of the International Financial Services
District with completion of the project all the way along the
Broomielaw is of huge importance
to the City, given the growth and importance of
financial services and the opportunities which are still there for
the City to build on.
Perhaps the most exciting immediate prospect is the
range of developments which are coming forward on the back of the
2014 Commonwealth Games.
How do you think increasing competition from out of
town business parks will impact on the
city centre office market?
Out of town development clearly offers occupiers
additional choice and, given differences in land values, often
allows rents to be significantly lower than the City Centre.
However rental level is only one of the factors which influence a
business location decision. Our own cost experience is that
businesses are increasingly placing more emphasis on total business
operations and that factors such as access to skilled labour,
access and communications, access to specialist business services
and access to customers and suppliers are playing a large part in
locational decisions. Many businesses have looked at out of town
locations and decided that the City Centre or close to the City
Centre is the place to be from a bottom line perspective.
With relatively low levels of office property
development in the city centre, largely due to lack of finance what
can the business communicty do to assist the City Council to make
sure Glasgow remains at the forefront of new development compared
to other cities?
The Council and the property market both want to
see development taking place, and property being filled.
Initiatives such as the IFSD partnership which involve both the
public and private sector in delivering the product and promoting
the concept have been crucial in maintaining Glasgow's competitive
momentum for financial services. Although the Council has a very
effective promotional
machine through the City Marketing Bureau we
benefit greatly from business endorsement of Glasgow as a business
location. Tesco Bank or JP Morgan addressing a business audience
and explaining why they decided Glasgow was the right location for
them, is a far more powerful message than the City Council doing
the same. Third party endorsement of the City by the business
community must therefore become a bigger weapon in our promotional
armoury and we are actively working to develop this further.
Steve Inch
DRS
Glasgow City Council
01 May 2010
Looking ahead, what do you think are the biggest
challenges, as well as opportunities for Glasgow's commercial
office property sector over the next two to three
years?
The biggest challenge without doubt is bringing confidence back
into the property market. Glasgow was fortunate enough to have a
substantial amount of retail and commercial development in the
pipeline when the recession took hold and this has kept a momentum
in the market not apparent elsewhere. Securing tenants for the
space which has been constructed is vital if the next round of
development projects is going to be brought forward.
I expect that demand for commercial and retail space will
recover, driven by demand from companies in the City who we know
are waiting to expand, and inward investors who we have been
tracking for some time, but who have put their projects on
temporary hold until the economy is in full recovery. The Council
will be playing its full part by continuing to develop innovative
ways of marketing its own land for development and using new
financial instruments such as Tax Increment Financing to de-risk
the development process.
Why should an individual investor or institution invest
in commercial office property in Glasgow, rather than one of your
competitor cities?
Although rental levels, and therefore property yields, have
taken a bit of a battering over the last couple of years, there has
been a surprisingly high level of activity in the commercial market
with the arrival of Tesco, expansions in both esure and Fortis and
many of the leading legal companies taking new space. The most
recent annual employment figures show that Glasgow has yet again
been the fastest growing employment base of any City in the UK and
with the stream of new business projects in the pipeline, I expect
demand for commercial space to rise sharply over the next two to
three years. As existing space is taken up, it creates new
opportunities for developers who are prepared to bring new projects
forward.
Can you sum up for us the approach Glasgow Ciy Planners
take in their relationship with commercial property
developers?
Our Planning and Building Control functions have been completely
revised to ensure they are delivered in a way which
understands the mechanics of the development process. Typically,
our dialogue with a developer will start from the timescale for
completion and opening and work back to when a planning consent
needs to be in place. Working with the developer's team we then
programme what we require by pre application discussions, when we
need the planning
application to be submitted, and agree a date on which we
propose to take an application to our Planning Committee. I like to
think that if an application has an exceptionally critical
timescale, we can be flexible enough to meet it and we have several
examples where we have done just that.
Looking ahead, what forthcoming commercial developments
in Glasgow excite you the most and why?
The biggest challenges at the moment are delivering the new
Buchanan Galleries phase since it is our pilot Tax Increment
Finance project and will provide a pilot for the wider
extension of this to other developments in the City. However
the prospect of a Phase 2 of the International Financial Services
District with completion of the project all the way along the
Broomielaw is of huge importance to the City, given the growth
and importance of financial services and the opportunities which
are still there for the City to build on.
Perhaps the most exciting immediate prospect is the range of
developments which are coming forward on the back of the 2014 Commonwealth Games.
How do you think increasing competition from out of town
business parks will impact on the city centre office
market?
Out of town development clearly offers occupiers additional
choice and, given differences in land values, often allows rents to
be significantly lower than the City Centre. However rental level
is only one of the factors which influence a business location
decision. Our own cost experience is that businesses are
increasingly placing more emphasis on total business operations and
that factors such as access to skilled labour, access and
communications, access to specialist business services and access
to customers and suppliers are playing a large part in locational
decisions. Many businesses have looked at out of town locations and
decided that the City Centre or close to the City Centre is the
place to be from a bottom line perspective.
With relatively low levels of office property
development in the city centre, largely due to lack of finance what
can the business communicty do to assist the City Council to make
sure Glasgow remains at the forefront of new development compared
to other cities?
The Council and the property market both want to see development
taking place, and property being filled. Initiatives such as the
IFSD partnership which involve both the public and private sector
in delivering the product and promoting the concept have been
crucial in maintaining Glasgow's competitive momentum for financial
services. Although the Council has a very effective
promotional machine through the City Marketing Bureau we
benefit greatly from business endorsement of Glasgow as a business
location. Tesco Bank or JP Morgan addressing a business audience
and explaining why they decided Glasgow was the right location for
them, is a far more powerful message than the City Council doing
the same. Third party endorsement of the City by the business
community must therefore become a bigger weapon in our promotional
armoury and we are actively working to develop this further.
Steve Inch, DRS
Glasgow City Council
(Reproduced from Lambert Smith Hampton's Glasgow Office
Market Report)
01 May 2010
